Distribution of Consumption Goods in the Socialist Commonwealth   Leave a comment

This essay by Ludwig von Mises came to me and it seems so pertinent to the economic discussions of the day that I’ve decided to do a series on it.

Image result for image of an eastern bloc carSocialism is a top-down organization of society. Generally it is governed by a board of some kind. These vary by society and the question of how these governments will represent the communal will isn’t of great importance. In cases where the power doesn’t rest in a dictatorship, the majority vote the members of the corporation determines the communal will. Minority opinions need not apply.

It doesn’t matter if you’re a good worker or a lazy worker, the State metes out the portions of your production. You may get more if you are determined to have more need, or less if you don’t rank as highly as someone else in society, or the exact same amount as everyone else. The distribution of consumption goods is entirely reliant upon the decisions of bureaucrats and your own efforts do not enter into the society … unless you’re politically connected, but that’s Lela speaking, not Mises.

Let us assume the simple proposition that distribution will be determined upon the principle that the State treats all its members alike; it is not difficult to conceive of a number of peculiarities such as age, sex, health, occupation, etc., according to which what each receives will be graded. Each comrade receives a bundle of coupons, redeemable within a certain period against a definite quantity of certain specified goods. And so he can eat several times a day, find permanent lodgings, occasional amusements and a new suit every now and again. Whether such provision for these needs is ample or not, will depend on the productivity of social labor.

It is not necessary that every man consume his entire allotment of goods.  He may let some of it rot, give some away as presents, and possibly hoard some of it for future use. He can also exchange some of them in a type of barter system. The material of these exchanges will always be consumption goods. Production goods in a socialist commonwealth are exclusively communal; they are an inalienable property of the community, and thus don’t enter the consumer market.

The “black market” exchange rate exerts force on the government’s distribution policies because if they restrict goods too tightly, they give the “black market” (a lingering form of capitalism) more power.

Every such variation shows that a gap has appeared between the particular needs of comrades and their satisfactions because in fact, some one commodity is more strongly desired than another.

The administration thus takes pains to bear this point in mind. Articles in greater demand will have to be produced in greater quantities while production of those which are less demanded must be curtailed. Such control may be possible, but one thing it will not be is free because the administration cannot allow the individual comrade to ask the value of his ration coupons. If the comrade were to have the right of choice, then it might well be that the demand for particular items would exceed the supply, or vice versa.

If one adopts the standpoint of the labor theory of value, the problem freely admits of a simple solution. The comrade is then marked up for every hour’s work put in, and this entitles him to receive the product of one hour’s labor, less the amount deducted for meeting such obligations of the community as a whole as maintenance of the unfit, education, etc. Taking the amount deducted for covering communal expenses as one half of the labor product, each worker who had worked a full hour would be entitled only to obtain such amount of the product as really answered to half an hour’s work. Accordingly, anybody who is in a position to offer twice the labor time taken in manufacturing an article, could take it from the market and transfer to his own use or consumption. For the clarification of our problem it will be better to assume that the State does not in fact deduct anything from the workers towards meeting its obligations, but instead imposes an income tax on its working members. In that way every hour of work put in would carry with it the right of taking for oneself such amount of goods as entailed an hour’s work.

Of course, labor is not uniform, so this method of regulation distribution is not workable. There are qualitative differences among the various types of labor which leads to a different valuation according to the difference in the conditions of demand for and supply of their products. Society cannot allow the laborer who had put in an hour of the most simple type of labor to be entitled to the product of an hour’s higher type of labor.

Hence, it becomes utterly impossible in any socialist community to posit a connection between the significance to the community of any type of labor and the apportionment of the yield of the communal process of production.

In a socialist society, valuation of labor and resultant remuneration are arbitrary set, but economic reality imposes limits on the communities power to fix wages because the income derived from consumption products creates a ceiling on wages and vice versa.

Some socialist societies reckon all labor to be of equal worth regardless of quality, so all receive the same reward. Others do allow allowance for quality of work, but in both cases the State controls the distribution of labor product.

It will never be able to arrange that he who has put in an hour’s labor shall also have the right to consume the product of an hour’s labor, even leaving aside the question of differences in the quality of the labor and the products, and assuming moreover that it would be possible to gauge the amount of labor represented by any given article. For, over and above the actual labor, the production of all economic goods entails also the cost of materials. An article in which more raw material is used can never be reckoned of equal value with one in which less is used.

Mises touches on a common problem that friends who used to live in Soviet Bloc countries have brought up repeatedly. Their consumer goods, what few they could lay their hands on, were much more cheaply produced than that available in the West. As a cost control measure, the socialist governments of these countries deemed producers to use less and lower-quality materials to produce goods because they had to pay wages regardless of whether the workers produced an hour’s worth of value or not.

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Posted July 11, 2017 by aurorawatcherak in Uncategorized

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